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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MARCH 13, 2001 12:00 AM (EST)
A.M. Best Co. has assigned an initial financial strength rating of A- (Excellent) to Kentucky Employers' Mutual Insurance, Lexington, Kentucky.
The release of this rating is indicative of A.M. Best's commitment to providing continuing coverage on the State Fund Workers Compensation marketplace.
Kentucky Employers' Mutual Insurance Authority d/b/a Kentucky Employers Mutual Insurance (KEMI) is a non-profit, independent, self supporting de jure municipal corporation and political subdivision of the Commonwealth of Kentucky (the Commonwealth). KEMI was established by legislation of the Commonwealth enacted on April 4, 1994. It's purpose is to serve as a competitive state fund that provides both a market of last resort for employers in the Commonwealth and another source of insurance in the voluntary market. As required by state law, employees can use this network to secure and maintain their workers compensation coverage. KEMI began writing business September 1, 1995. It performs duties under authority granted directly by the Kentucky General Assembly. Except for items specifically addressed in its enabling statute, KEMI operates as a domestic mutual insurance company.
KEMI markets workers compensation coverage via independent insurance agencies throughout Kentucky. All KEMI insurance policies are 12 months in duration and are assessable. Binding authority is retained by KEMI and the company is governed by a board of directors. The board consists of 10 members, seven of which are Governor appointed, while three members are cabinet secretaries that serve as ex-officio voting members.
The rating reflects the company's outstanding profitability, strong capitalization, favorable loss reserving patterns and strong market presence. These attributes are reflective of the company's dominant market share position as a provider of workers compensation coverage within the Kentucky marketplace. The rating acknowledges the risk selection process and effective loss control practices that have enabled the company to generate strong earnings while maintaining a high business retention percentage. Consistent profitability, combined with KEMI's conservatism in establishing its loss reserve position, is demonstrated in the favorable reserve development that has been reported since commencement of operations. While the profitability component is a direct result of related loss control expertise combined with a favorable expense structure, sustained profits have enabled KEMI to continually improve its leverage position.
As both a competitive marketer and writer of last resort, KEMI maintains the ability to command sufficient rate structure while retaining cancellation provisions subject to non-compliance of underwriting guidelines. Business is written with considerable focus on disciplined customer service and marketed through a combination of both in-house and field underwriters.
Somewhat offsetting these positive factors is the company's limited spread of risk, both regulatory and by line of business, inherent to a monoline workers compensation writer. Of primary concern is the heightened level of state specific regulatory issues to which KEMI remains exposed. In addition, the company continues to face the sustained challenges of operating within a highly competitive market environment. Despite reporting sound results to date, the company lacks a long term operating history to demonstrate stability in its market. As operations continue to focus specifically on workers compensation, a relatively long tailed line, A.M. Best will continue to monitor the results of the operations going forward.
KEMI's Loss Education staff is committed to promoting workplace safety by working in partnership with its policyholders to evaluate operations while developing practical and effective loss control measures. KEMI seeks to reduce losses through customized safety programs, specifically tailored to each policyholders business. Industry specific safety programs have been developed for such industries as residential construction and tobacco harvesting. Additionally, KEMI has partnered with the University of Kentucky Injury Prevention and Research Center to identify injury patterns and causal factors while developing innovative educational programs including Ladder safety, Construction safety and an Occupational Burn program. The company offers onsite training and certification by safety professionals. Policyholders generating in excess of $10,000 are assigned a loss education representative to provide onsite assessment and loss control recommendations.
KEMI's claims staff is dedicated to providing supportive, prompt and responsive service, in addition to ongoing education to all business partners. Through intensive investigations, timely communications and proactive involvement, KEMI strives to provide exceptional claims management. The company provides a comprehensive managed care network for all policyholders and their employees, allowing each participant access to quality, cost-effective healthcare. KEMI remains proactive in developing "Return to Work Programs" with policyholders to facilitate opportunities for returning injured employees back to work.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.